March 2023 Boca Raton Area Luxury Market Report from Jean-Luc Andriot and The Institute for Luxury Home Marketing

As I am a member of The Institute for Luxury Marketing, I thought I would share with you their March 2023 report for Boca Raton - Delray Beach.

It is your guide to a general analysis on the trends and comparative data on the top-residential markets in the Boca Raton - Delray Beach area.

Statistics are separated between single family homes and condominiums / townhomes in Boca Raton - Delray Beach.

At the national level:

The Demand for Luxury Real Estate Examined

Over the last 2.5 years, the state of the luxury real estate market has become one of the hottest topics discussed in news outlets, multi-media platforms, and within the industry itself.

Conversations initially focused on spiraling demand and rising prices. This was soon followed by reports on the increasing demand for multi-faceted relocations and migrations. After which, the impact of falling inventory levels took prime spot.  While these topics are still highly key in understanding the current market, the declining sales volume has become the most recent focus of attention by the media.

Reports of plunging sales have sparked much discussion as to what the spring market will bring, coupled with the uncertainty about the economy and whether there will be any further changes to the interest rate.

But there is also quiet optimism in the air.  Overall prices seem little impacted – according to the Institute’s median sold prices for the last three months, prices have edged up, and there is only a small 1.38% decrease compared to February 2022.

The reality is that except for the markets where the buying frenzy caused both price increases and continued sales growth to become unsustainable, luxury home purchases are mostly returning to more traditional transaction levels. 

The data for February 2023 does indicate there is positive movement with respect to sales.  Compared to January 2023, the number of new listings entering the market increased, but of more significance is that the number of sales also increased in both the single-family and attached markets. 

This may only be the start of a possible trend, but if it continues in this direction, buyer demand, which has remained hesitant for the last few months, could return as we enter the spring market.

While the affluent tend to be less impacted by outside influences, concerns over the financial market and economic variables have seen buyers take a long pause.  However, with less competition and more competitive rates for mortgage and other loan types now offered to affluent buyers (as their wealth makes them considerably less risky to lenders), this may continue to help ignite sales again.

Mansion Global just announced that both New York and San Francisco saw their numbers of sales increase during February.  However, both markets report that there has been trade-off insomuch as asking prices were negotiated downwards by as much as 17% in San Francisco and 12% in New York.  Although, of equal note, both these markets did see their price points reach unprecedented heights at the end of 2021, so a leveling out was not unexpected.

On the other hand, as we reported last month, markets that still offer more affordability or potential price growth are expected to see an uptick in demand.  The growth of demand for the luxury sector in these markets is heavily driven by millennials, particularly those who can work from home. 

According to Bloomberg, this generation is not living in their parent’s basements anymore; they are buying multimillion-dollar homes1.  Equally, Bloomberg expects this generation to change the high-end housing market as their preferences are driven by technology and environmental requirements.

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